Olam Group annual revenues reduced amid challenging global conditions
Singapore-based agri-business, Olam, has reported its latest annual results, with wider market turbulence resulting in revenues declining 12.1% to $48,3 billion, despite a stronger second half of 2023 for the group, writes Neill Barston.
According to the business, while volatilities have impacted its performance, it noted that its ofi ingredients division, which serves a number of sectors including confectionery and snacks manufacturers with its cocoa interests. During the course of last year, that segment of the company delivered revenues of $15.5 billion, down 4.9% year-on-year, having forged a wide range of industry solutions that have kept its operations competitive.
The company’s annual profits after tax decline 55.7% year-on-year, to $278.7 million, though the company reported some improvement for the second half of the year, with profit levels showing 15.5% upturn, to $230 million for the second period.
Furthermore, the company’s wider Olam Agri interests delivered $31.3 billion for the business, down 15% year-on-year, as it faced market instability within supply chains, impacted by the ongoing war in Ukraine, and other geopolitical logistics issues, though its earnings before tax and interest increased 19.3% to $952 million, with double-digit growth in both its main operating divisions. The business noted that Olam Agri had contributed less to its performance due to a 35.4% stake sale to the Saudi Agricultural and Livestock Company.
The company added that it the agri division continues to execute its strategy of scaling up its global origination and trading operations, while investing in value-added destination processing across Africa and Asia to deliver profitable growth and returns, with the Saudi deal anticipated to prove a platform for future growth within the Gulf region.
Olam Group Co-Founder and CEO, Sunny Verghese (main image), commented: “The double-digit EBIT growth at both ofi and Olam Agri in H2 2023 reflects their differentiated, unique business propositions and solid execution post Re-organisation. We are confident of our growth prospects and are taking steps to ensure we continue to drive returns for investors amid a challenging macroeconomic backdrop and uncertain geopolitical conditions.
“First, we are launching a share buyback programme up to a maximum 5.0% of our outstanding shares within our current mandate and renewal of this mandate at the upcoming Annual General Meeting in April 2024. “Second, we remain committed to pursuing the listings of ofi and Olam Agri. We will however retain flexibility around the sequencing of the two proposed listings and explore other strategic options to unlock value for shareholders.
“Finally, we understand there has been some concern following allegations in the media about our Nigerian operations. As announced on February 19, 2024, an independent internal investigation launched by the Olam Group Board and its Audit & Risk Committee comprising external counsels and independent auditor has concluded. The investigation team found no evidence supporting any of the specific allegations reported. In the meanwhile, all our businesses in Nigeria have been operating normally and we look forward to continue investing and growing in the country.”
Olam Group CFO, N Muthukumar, shared his optimism. He said: “We have maintained discipline in our use of capital and focused our investments that are earnings and returns accretive while enhancing our sustainability impact. Given the inflationary and rising interest rate background, we have focused on optimising our overall cost structures while seeking to pass through rising interest costs.”
